HKSAR v. SHY KIN HUNG

DCCC 1164/2016

[2018] HKDC 1557

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 1164 OF 2016

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REASONS FOR SENTENCE

1.  The defendant pleads guilty to nine charges of using a false instrument (charges 11-19) and one charge of using a copy of a false instrument (charge 20), contrary to sections 73 and 74 of the Crimes Ordinance[1]. The prosecution asks that charges 1-10 be left on the court file not to be proceeded with, without leave of the court or the Court of Appeal.

2.  Full particulars of the offences are set out in the summary of facts admitted by the defendant on 30 November 2018.  I have seen copies of all the false instruments and related invoices and quotations. 

3.  In summary between October 1994 and August 2015 the defendant was employed as the sales manager of Saint Glas Limited (“SGL”).  SGL and Saint Tech Engineering Co., Limited (“STE”) were co-owned by Mr Lee Kin Wah and his wife.  Both SGL and STE engaged in trading of glass products and glass installation projects in Hong Kong and shared the same address and staff.

4.  The defendant’s responsibilities included receiving orders from customers, preparing quotations and customer invoices and collecting payment from customers.

5.  In 2006 together with other persons the defendant incorporated Aesthetics Engineering Limited (“AEL”) and in 2011 together with Mr Yiu Oi Chung incorporated Element Selection Limited.  Both AEL and Element Selection Limited also traded in glass products and glass installation projects in Hong Kong. 

Charges 11-20

6.  Between April 2013 and April 2015 the defendant submitted to Benny To & Co, the auditor of AEL, nine false invoices for the purpose of preparation of the Annual Report for the year ending 31 March 2014. 

7.  The invoices purported to be issued by SGL/STE to AEL for the sale and installation of glass products.  SGL/STE had not issued any of these invoices.  The records of SGL/STE showed that three of the invoices were issued to Hien Lee Engineering Limited; four to Mei Ah Construction Co., Ltd and two to Element Selection Limited. 

8.  Hien Lee Engineering Limited and Mei Ah Construction Co., Ltd were non-existent companies.  Both companies had not been on the business register between 22 August 2008 and 21 August 2018 and did not occupy the addresses stipulated on the invoices submitted to SGL/STE by the defendant. 

9.  There were however existing companies with a similar name, namely Hien Lee Engineering Co., Ltd and May Ah Contracting Company/ May Ah Contracting (China) Limited.  The existing companies confirmed that they did not enter into these transactions.

10.  Mr To of Benny To & Co would not have accepted the invoices and booked the amounts in the Annual Report for the year ending 31 March 2014 if he had known the invoices were false.   

Charge 20

11.  On or about 30 January 2015 the defendant submitted to the Accounts Department of SGL a copy of a cheque deposit advice issued by the Bank of China (Hong Kong) Limited for the sum of $14,017 together with a copy of the cheque purportedly drawn by Leung and Chow Construction Limited on account no. 012-578-0-000717-9, being payment proof of four invoices.    

12.  The four invoices were for the supply of glass to Leung & Chow Construction Limited.  Leung & Chow Construction Limited was a non-existent company. The company had not been on the business register between 22 August 2008 and 21 August 2018 and the address stipulated on the invoices did not exist.  

13.  The bank account no. 012-578-0-000717-9 was in fact held by Aesthetics Creation Limited and had been terminated on 18 August 2014.  The defendant was one of the directors of Aesthetics Creation Limited and one of the authorized signatories of that account.    

14.  Without the knowledge of SGL payment of the four invoices was actually settled by cheque issued by the defendant’s company AEL.

15.  If the Accounts Department had known the copy cheque was a false instrument they would have reported the matter to the management of SGL and the transactions would have been halted and called into question. 

Arrest

16.  The defendant was arrested on 26 August 2015.  On the same day company chops of Hien Lee Engineering Ltd., Leung & Chow Construction Ltd and Mei Ah Construction Co., Ltd were seized from the office of AEL.  Three days later on 29 August 2015 the defendant resigned from SGL. 

Mitigation

17.  In passing sentence, I have taken into account everything said on behalf of the defendant by Ms Wong together with the defendant’s mitigation letter and ten mitigation letters from the defendant’s family, his ex-wife, friends and former work colleagues, all speaking very highly of the defendant.  

18.  The defendant has been married and divorced twice.  The second marriage to Madam Chiu Tsz Ying was in 2010.  There are two children of the marriage now aged 5 and 6.  Madam Chiu and the defendant divorced in 2016 after the arrest of the defendant. 

19.  Madam Chiu (letter 7) describes how the defendant took care of her when she experienced two miscarriages and her father suddenly passed away.  Madam Chiu says she will never forget the care and love of the defendant.  Despite working long hours Madam Chiu says that the defendant insisted on taking the two young children to and from school every day. 

20.  Although now divorced the ex-wife hopes to reconcile with the defendant.  The children have drawn pictures (letter 9) saying how much they miss their father.  Ms Wong tells the court that the defendant also wishes to reunite with Madam Chiu and asks that Madam Chiu waits for him and trusts him.   

21.  Madam Chiu’s mother (letter 8) also describes how the defendant has taken care of her daughter and her family after her husband took his own life.  Friends of the defendant (letters 10 & 11) and former schoolmates (letters 12 & 13) all speak of the defendant as a good family man and devoted father. 

22.  The defendant’s family and friends, including Madam Chiu have been present in court during the sentencing process showing their support for the defendant. 

23.  The defendant cannot be given credit for a clear record having previous convictions for obtaining property by deception, forgery and using the identity card of another in 1990 for which he received a suspended sentence and forgery in 1994 for which he was sentenced to 9 months’ imprisonment. 

24.  Ms Wong explains that the 1990 offences related to the defendant using his elder brother’s identity card to obtain a loan so he could pay for a space in a private columbarium for his late mother who died of cancer in 1987. 

25.  The 1994 offence related to his employment with a securities firm and was in connection with ensuring the defendant achieved the monthly quota so that he would have a stable income to look after his father who had that year been diagnosed with cancer.  The defendant’s father passed away in 1999.

26.   I take into account that since serving the sentence of imprisonment in 1994 the defendant remained out of trouble for over 18 years.  Ms Wong has detailed how the defendant rehabilitated himself after serving the prison sentence. 

27.  In October 1994 the defendant joined SGL where he remained until he was arrested in August 2015, almost twenty-one years.  In that time the defendant helped build up the sales department of SGL.  Ms Wong says that when the defendant joined SGL the revenue of the sales department was $7 million and by the time he resigned the revenue of the sales department was over $100 million. 

28.  Mr Lam Wing Chuen, the Deputy General Manager of SGL (letter 1) details the hard work of the defendant and how the defendant helped to develop the business of SGL. Mr Man Chi Lai (letter 2), who was a salesman in SGL in 1997, describes how the defendant helped him in his work during the two years he stayed with SGL.  Mr Man has remained a good friend of the defendant and describes him as a very responsible and caring father. 

29.  Mr Lee Bo Kan and Mr Tam Man (letters 3 & 4), former colleagues in the securities firm the defendant worked in prior to being sentenced to imprisonment in 1994, also speak of the defendant helping them at work.  Mr Lee also regards the defendant as a friend and describes him as a good father. 

30.  In 2016, after his arrest, the defendant met Mr Kan Shui Wai, who he had known for over twenty years, Mr Kan having purchased glass from SGL through the defendant.  The defendant told Mr Kan about his arrest.  Mr Kan invited the defendant to join his company.  The defendant agreed but because he had to frequently report to the ICAC and see his lawyers the defendant only joined as a part-time staff. Mr Kan (letter 5) says he is willing to continue hiring the defendant as a full-time staff. 

Offences

31.  Ms Wong submitted that there was no actual loss to SGL in the sense that there were actual transactions wheregoods were supplied by SGL and for which full payment was made by the defendant’s company AEL.  Ms Wong explained that the defendant stupidly committed the offences by using false instruments to try and show that expenses were actually incurred by AEL.

32.  Ms Wong further submitted that as there were actual transactions and that for charges 11-19 the false instruments were submitted to Benny To & Co and not to SGL the offences were not committed as an employee of SGL and therefore there was no deceit of SGL and no breach of trust.  As regards charge 20 Ms Wong submitted that payment having been made by AEL the defendant did nothing to damage the financial interests of SGL. 

33.  In support of the submission there was no breach of trust Ms Wong refers the court to HKSAR v Poon Kar Yue where the Court of Appeal discussed what amounts to a “breach of trust” for the purpose of aggravating a sentence[2].  The facts of that case concerned whether a student visiting the Student Hall was in a relationship of trust with other students.  Clearly the defendant being the employee of SGL was in a relationship of trust. 

Community service

34.  Ms Wong submits there being no loss to SGL; no breach of trust and the defendant through his company AEL paid the full amount of all the transactions, the defendant’s criminality is not very high and therefore a community service order is appropriate.

35.  In Secretary for Justice  v Li Cheuk Ming[3] the Court of Appeal held that for serious offences, including bribery and corruption, a community service order would only be imposed where there are exceptional circumstances. 

36.  In support of her submission Ms Wong refers the court to HKSAR v Wan Ka Kit[4]where the Court of Appeal discussed whether a community service order was appropriate for an offence of burglary.  The court held that other than in the most exceptional cases, a community service order will rarely be appropriate for burglary or attempted burglary.

37.  Ms Wong also refers the court to the Reasons for Sentence in HKSAR v Poon Hoi Kan, where a community service order was imposed for multiple offences of using false instruments and obtaining property by deception[5].  All I need to say is that the facts of that case are entirely different.

Non-existent companies

38.  In submitting there was no loss and no breach of trust Ms Wong made no reference to the invoices and quotations submitted by the defendant to SGL/STE, invoices and quotations which were prepared by the defendant and for which the payments made by AEL related, or sought to explain why AEL needed to pay for any of these invoices.

39.  As noted earlier some of the invoices were issued to non-existent companies: Hien Lee Engineering Limited; Mei Ah Construction Co., Ltd and Leung & Chow Construction Limited. 

40.  When the court asked Ms Wong whether there was anything she wished to say about this documentation and what inferences could be drawn from the documentation, Ms Wong replied that for Hien Lee Engineering Limited (charges 11, 12 & 14) the defendant was asked by Mr Henry Mok, who worked for Hien Lee Engineering Co., Ltd, a client of SGL, to use the name Hien Lee Engineering Limited. 

41.  The defendant therefore believed that the customer was Hien Lee Engineering Co., Ltd albeit a slightly different name was used.  In support Ms Wong showed the court a personal email of Henry Mok requesting the name Hien Lee Engineering Limited be used for a certificate.

42.  When payment was not received the defendant through AEL paid first in order to maintain good customer relations and to maintain his sales performance in SGL.  Notwithstanding Henry Mok promised to repay the defendant, no repayment had been made by the time the Annual Report for AEL needed to be prepared.  The defendant therefore stupidly prepared false invoices purportedly issued by SGL and submitted them to Benny To & Co. 

43.  Ms Wong said the same explanation applied to Mei Ah Construction Co., Ltd (charges 13, 15, 18 & 19), namely that a staff member, called “Man Gor”, of May Ah Contracting Company, a client of SGL, asked the defendant to use the name Mei Ah Construction Co., Ltd. 

44.  Again when payment was not made, in order to maintain good customer relations and to maintain his sales performance in SGL the defendant paid the invoices and when he had not been repaid stupidly prepared false invoices purportedly issued by SGL and submitted them to Benny To & Co.

45.  The customer named in the invoices submitted to SGL in respect of charges 16 and 17 was Element Selection Limited, a company set up by the defendant.  Ms Wong explained that there was a disagreement with the other partner about payment therefore AEL paid first.

46.  With regard to Leung & Chow Construction Limited (charge 20) Ms Wong explained thatMr Jason Kwan, who had previously worked in a company called Heng Wei, a client of SGL, informed the defendant that he had switched companies and now worked for Leung & Chow Construction Limited.  In support Ms Wong submitted a screen capture from the defendant’s mobile phone of Jason Kwan informing him that he had switched companies. 

47.  The defendant did not check the business register and believed that Leung & Chow Construction Limited was a genuine company.  Once again when payment was not made the defendant paid first.  The defendant stupidly submitted a forged cheque to SGL seeking to show the customer named on the invoices had paid.

48.  I have no hesitation in rejecting the explanation of the defendant that the need to submit false documents arose because he had through AEL paid first for customers of SGL. 

49.  Having indicated in court that I did not accept from the bar table the defendant’s mitigation that there was no loss and no breach of trust, sentence was adjourned for the defence to consider whether they wished to call evidence in support of the mitigation. 

50.  After an adjournment of two days, Ms Wong informed the court that the defendant would not be giving evidence in support of the mitigation.  Ms Wong adopted her mitigation there was no loss and no breach of trust and further explained why the defendant paid the invoices and submitted false instruments.  Ms Wong emphasised that the victim of charges 11-19 was Benny To & Co and not the defendant’s employer. 

51.  I find inherently improbable that over a period of about 6 months (the invoices dated between August 2013 – February 2014) the defendant would pay over $750,000 on behalf of customers.  I find inherently improbable that if the defendant was paying for customers of SGL that he would need to conceal from SGL that he was paying on behalf of the customers, the defendant according to the Deputy Manager (letter 1) being well respected and helped build up the sales department of SGL.  I find inherently improbable that if the defendant was paying for customers of SGL that he would need to use false instruments to conceal from SGL that he was paying on behalf of the customers and to conceal from Benny To & Co the true reason for the payments made by AEL. 

52.  I am satisfied from the documentation and the fact that three chops of the three non-existent companies were found in the office of AEL, which chops Ms Wong says the defendant has no idea why they were there, that the only inference to draw is that the use of non-existent companies was to conceal from SGL who the actual customer was. 

53.  Albeit the defendant through AEL settled in full all the invoices, by concealing from SGL who the actual customer was, there was in my view a very clear breach of trust.  Whilst I agree with Ms Wong that the defendant is only to be sentenced on the facts he has admitted, the culpability of the defendant is not to be looked at without regard to why he needed to use false documents. 

54.  Taking into account, inter alia, that the defendant used false documents to deceive both his employer and Benny To & Co; the careful planning which must have taken place in committing the offences, offences which involved the defendant acting in breach of the trust placed in him by his employer; the personal circumstances of the defendant and that the defendant, albeit almost twenty years ago, has previous convictions for deception and forgery, I am satisfied that the defendant’s circumstances and the circumstances relating to the nature of the offences are not exceptional whereby a non-custodial sentence is to be imposed.  I reject the submission a community service order is appropriate. 

Sentence

55.  I regard these offences as serious offences.   Submitting false documents to Benny To & Co prejudiced the accountant, who audited the accounts of AEL on the basis that all documentation was genuine.  Concealing from his employer who the real customer was prejudiced the running of his employer’s business. 

56.  Taking into account the invoices were paid in full, I am satisfied the proper starting point after trial is 15 months’ imprisonment on each charge.

Discount for pleading guilty

57.  The defendant first appeared in the District Court on 10 January 2017 and indicated his plea of not guilty on 22 June 2017.  The case was adjourned for a pre-trial review.  On 5 December 2017 the case was set down for trial commencing on 23 July 2018.  On 4 April 2018 the trial was re-fixed to commence on 19 November 2018 with twenty days reserved. 

58.  The new sentencing guidelines in HKSAR v Ngo Van Nam therefore apply[6]. 

59.  Ms Wong submits that the defendant should be given a discount of close to one-third, the defendant having pleaded guilty before the trial started and after plea negotiations resulting in the prosecution agreeing not to proceed with charges 1-10. 

60.  On 19 November 2018, the first day of trial, the defence applied for an adjournment of several days to, inter alia, further consider the voluminous unused material.  The trial was adjourned to 22 November when application was made for a further adjournment to enable the defence to search the computer of SGL in an attempt to find deleted emails relating to the charges.  The trial was adjourned to the 23 November when application was made to adjourn to 27 November because the search of the computer could only take place on 26 November.

61.  On 27 November the prosecution applied to adjourn to the next day to take instructions from the Department of Justice.  On 28 November 2018 the defence indicated for the first time that pleas of guilty would be entered to charges 11-20. 

62.  Mr Chau informs the court that prior to trial no offer of a plea bargain was made by the defence.  On 27 November 2018 the prosecution made an offer to the defence.  The defence made a counter offer which, after taking instructions from the Department of Justice, was accepted by the prosecution. 

63.  The case was further adjourned for summary of facts to be agreed.  Pleas of guilty were entered on 30 November 2018 on what would have been the tenth day of trial had the trial commenced on 19 November 2018.

64.  In HKSAR v Ngo Van Nam the court said that subject to the overriding discretion of the sentencing judge a discount of between 20-25% from the starting point for sentence was appropriate where the defendant indicated his plea of guilty prior to trial; 20% where pleas of guilty were made on the first day of trial and where a defendant pleads guilty during trial the discount would usually be less than 20%[7].

65.  The defendant had every opportunity to plead guilty prior to 28 November 2018, the case having been initially set down for trial on 5 December 2017.  The defendant having pleaded guilty before the trial started, albeit ten days after the trial should have started, I am satisfied the appropriate discount is 20%. This reduces the sentence on each charge to 12 months’ imprisonment. 

Totality

66.  Ms Wong submits that concurrent sentences are appropriate.  I disagree.  In my view sentence must reflect that false documents were submitted to both SGL and to Benny To & Co.    

67.  Taking into account the seriousness of the offences; the defendant last appeared before the courts in 1994; and the defendant’s personal circumstances, I am satisfied that a total sentence of 15 months’ imprisonment properly reflects the defendant’s overall criminal culpability on the ten charges[8].  

68.  In the defendant’s letter (letter 6) he speaks of charitable donations to World Vision and participating in voluntary work in the “Volunteering without Walls” scheme in Sham Shui Po.  Ms Wong explains this is a scheme for the homeless in Sham Shui Po.  Although no documentary evidence has been produced in support of either the donations or voluntary work, I am prepared to accept this mitigation and to give credit to the defendant for his donations and voluntary work.  In the circumstances I reduce the total sentence by 1 month. 

69.  The defendant is convicted and sentenced as follows:

Charges 11-19 – 12 months’ imprisonment concurrent on each charge; and

Charge 20 - 12 months’ imprisonment with 2 months consecutive and 10 months concurrent to charges 11-19.

The total sentence to be served by the defendant is 14 months’ imprisonment.